All Forum Posts by: Todd Dexheimer

Way too vague to answer your question and serve you well. You really need to think about what you are trying to accomplish. Do you want passive income or active income? If you are looking just to invest passively and maximize your profits, then investing in a syndication, hard money, NNN can be great. If you want to really make money and aren't afraid of the risk, then invest in start ups. If you want to create a business, then buy real estate yourself or start another business.

The options are truly limitless. 

First off, make sure that you trust the GP and their track record. 

Some questions: 

How much will the GP be investing in the deal? 

What is your track record on previous deals similar to this one? 

How often will you communicate with investors and what is provided? 

Give me examples of some deals that didn't go well and what did you do (If they've all gone well, thats a huge red flag)

Describe your team and your past relationship with them

Here are some other things to think about: https://www.biggerpockets.com/...

As an LP you will be investing in an LLC that will own the real estate. You could set up your own LLC and invest through that or invest through your personal name. Most CPA's/attorney's the I've talk with tell me that there is limited/no advantage.

As a GP, you will be forming a new LLC for the acquisition. This will be the LLC that the LP's will invest in as well.

On the tax question, both LP and GP should have the same taz treatment

If he's dead set on going to college and plans on going into real estate, I would suggest a degree in Real Estate. Marketing, business, finance are all good back ups. 

Certainly can be challenging, but I would say transparency is huge. Is the sponsor willing to give you all that you need to make an informed decision? Are they providing the full rent roll, the current T-12, rental comps, etc. Are they giving you the full underwriting or just the sexy deal deck that makes everything look good?

How is their team and their personal experience? 

Do they have a well thought out plan for when a recession happens or are they always counting on the market going up? I just saw a stat on Real Page showing Phoenix, AZ and other markets having -5%+ rent growth. I haven't fact checked it, but this should be something sponsors are talking about. What happens when rent goes down? 

We like to be an open book, make sure the sponsor is willing to go into details with you. 

Vetting a sponsor through a broker/capital raiser can certainly be a bit more challenging, but a lot of the same questions should be answered. 

Here is an article on what to look for in a sponsor: https://www.biggerpockets.com/...

If you are doing a syndication, the more units, the better. Larger properties in the 90+ unit range, allow for professional on-site maintenance and leasing and spreads out risk to the investors. Also, doing a small raise on an apartment costs a lot on the start up, so it's often prohibitive to the deal. 

Of course you're limited to what you can raise. You may consider partnering with others on your first few deals, so that you can get a larger deal done together. 

As for a market: 

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

The paper losses from a syndication can be awesome. Many will provide you 70-100% loss in year 1 through cost segregation and bonus depreciation. Bonus depreciation is phasing out over the next several years, so this is something to consider. I would suggest reaching out to a qualified CPA to discuss this. Our company uses Clifton Larson Allen, which is a firm that have a real estate division. 

I am not a CPA, but happy to chat about our experiences, both on the LP and GP side of a syndication

Eric I am happy to help. Zach Robins was great, but now he is in house council. Hellmuth and Johnson is good and Chris Huntley is solid. Happy to chat further as well. I have done a SCOR offering, 504 offering, 506(b) and 506(c). Unless you are doing a SROC or MNvest offering, you can use a securities attorney outside of the state. 

Hopefully no one is promising returns and are instead projecting returns. With a syndication we are typically projecting between a 5-9% cash on cash and a 14-17%IRR on a 5 year hold. There are of course many different things that can happen during the hold that can make those returns go up or down.

As for an STR, I would expect the possibility of greater returns, with much more work and risk exposure. STR's are great right now, but if a recession hits, there is likely much more volatility.

If you have more specific question on how operators are approaching the space, I am happy to help with that. 

Do you want to be average? If so, stop listening to podcasts and just keep doing what the rest of society does. 

If you don't want to be average, the listen to people who've done something great and use the guests on the podcast as inspiration, not as a comparison. I started with only $20k and now own 4,000 units, but you could look at my story and say "I can't be like him, because that's not my story." You have your own life and journey, so learn what you need, network with the right people and take action. 

In my mastermind, I helped mentor a client that is in his upper 30's to buy large apartment buildings. He used the podcasts as motivation, not comparison and got after it. I'm buying a building right now from a guy that started buying single family homes and duplexes in his late 50's with very little money, then bought a few apartment buildings. He's now late 60's and going to make a great profit on this 150 unit apartment building that cash flowed nicely for him.